How to avoid failure in Network Marketing

(and the ONLY condition in which to get in)

I believe network or 'multi-level marketing' is not an intelligent model for most people. UNLESS, three criteria are met. Below is a THINKING PERSON'S look at the network marketing side. If you'd like to read of other ways to make this a business, at least read through this model first and then read more about different ways to make money apart from an MLM.

The traditional MLM model that is just too long and hard. (graph comparisons available at www.SmogBusters.Biz)

The Product Advantages

Financial success for most multi-level marketing distributorships is based upon an entrepreneur making some profit from directly selling the products to consumers and making overrides from sales of other distributors who the entrepreneur has signed up. This entrepreneur might make $5 from directly selling a single $100 product, but would make $100 from 20 people he signed up each selling or buying that product. In most of these models, our entrepreneur and other ‘distributors' are set up to automatically buy that $100 product every month so that $100 would be recurring monthly income.

If our entrepreneur's 20 distributors each signed another 20 distributors each, our entrepreneur's monthly income suddenly grows to $ 2100 per month. This is magic of network or multi-level marketing. But, this also means months or even years must elapse to have a network recruited, signed and actively working.

The down side is that these are very difficult businesses to build due to a number of contributing factors below:

Product – MLM product is not unique from what is generally available and is not competitively priced from other retail sources. Or it has a limited market appeal (like legal services). Inventory and showing product can be a problem since the bigger the ticket item, the bigger the physical item.

SUCCESS FACTOR #1 The product has to be the first like in the market, it's value must be immediately evident to be much greater than it's cost, and it can't have significant competition.

Price and Margin – because only a small percent (5% to 8%) of a relatively small purchase price ($100 or less) is available for the entrepreneur in a traditional MLM, it takes much effort to see even modest results from direct sales. It would take 200, $5 profit transactions to even make $1,000 for one month. 200 transactions are difficult to find and execute especially if the product is available somewhere else or has limited immediate value to a consumer.

SUCCESS FACTOR #2: The product margin must be significant so that the average person can see thousands of dollars if they apply a slightly better than average effort.

Recruiting – The stigma of network marketing is a problem for most, and usually the ONLY ‘value' is to make money long term by everyone participating in the program. It would normally take months or a year to sign 20 people directly who would each sign 20 others to earn that same $2,000. The typical recruiting methods are signing friends and family, inviting people to sales meetings, or prospecting through mail or email for people interested in a home based business. Unfortunately most have been exposed to one of these and/or has tried them unsuccessfully due to all the above fundamental problems with this business model. This makes recruiting for a new product and opportunity limited, unless people can see immediate SIGNIFICANT income from their effort and recruiting difficulties can be minimized.

SUCCESS FACTOR #3: The company must be in the early stages of building distributors OR the 'hot product' must still be unknown to the vast majority of consumers.

Back Office - One of the great strides taken by MLM and network marketing companies is making the ordering, credit card clearing and shipping nearly idiot-proof for most distributors. No longer is it necessary to stock product since the company can do that for the distributor. With MLM's like SmogBusters.Biz, Quixtar and others you receive a free e-commerce website with the ability to automatically clear credit cards and schedule shipping, as well as access to many other resources from online streaming media and the idiot's guide to SmogBusters Business Success.

Add to this MODERN marketing methods of e-marketing, mass media recruitment and branding, an MLM business can actually become a lower risk venture than just about any other small business opportunity.

Comments? Questions? Email Here

© HowtoAdvice.com

How to Advice .com